SHAREHOLDERS AGREEMENT
PRAXIS PHARMACEUTICALS INC
(PRAXIS US)
PERPETUAL TRUSTEES NOMINEES LIMITED
(TRUSTEE)
ROTHSCHILD BIOSCIENCE MANAGERS LIMITED
(ROTHSCHILD)
CM CAPITAL INVESTMENTS PTY LTD
(CM CAPITAL)
CIBC AUSTRALIA VC FUND LLC
(AVCF)
MOOROOLBARK TECHNOLOGY PTY LTD
(MOOROOLBARK)
THE AUSTRALIAN NATIONAL UNIVERSITY
(ANU)
AND
PHARMAXIS PTY LTD
(COMPANY)
XX XXXXXXX XXXXXX AND XX XXXXX XXXXXXXX
(FOUNDERS)
XXXXX XXXXXXXX LAWYERS
Level 23, Governor Xxxxxxxxx Tower
0 Xxxxxx Xxxxx
Xxxxxx XXX 0000
Xxxxxxxxx
Telephone: + 000 0000 0000
Facsimile: x000 0000 0000
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CONTENTS PAGE
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1. DEFINITIONS.............................................................2
2. INTERPRETATION..........................................................5
3. SHAREHOLDER AGREEMENT...................................................5
4. TERM....................................................................6
5. INCORPORATION...........................................................7
6. NAME....................................................................7
7. CONSTITUTION............................................................7
8. REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS.......................7
9. COMMERCIAL OBJECTIVES...................................................7
10. SOLE COMMERCIAL VEHICLE.................................................8
11. DIRECTORS...............................................................9
12. CHAIRMAN OF THE BOARD..................................................11
13. BOARD MEETINGS.........................................................11
14. CHIEF EXECUTIVE OFFICER................................................13
15. FINANCIAL CONTROLLER AND SECRETARY.....................................13
16. AUDITORS...............................................................14
17. ACCOUNTING AND INFORMATION.............................................14
18. CONDUCT OF BUSINESS....................................................15
19. CRITICAL BUSINESS MATTERS AND CRITICAL SHAREHOLDER MATTERS.............15
20. GENERAL MEETINGS.......................................................16
21. CAPITAL STRUCTURE......................................................16
22. PRE-EMPTIVE RIGHTS.....................................................17
23. TAG-ALONG RIGHTS.......................................................21
24. DRAG-ALONG RIGHTS......................................................21
25. CONVERSION OF ACP AND BCP SHARES.......................................23
26. REDEMPTION OF ACP AND BCP SHARES.......................................23
27. ACP AND BCP SHARE DIVIDENDS............................................24
28. FREEDOM TO ACT.........................................................25
29. RELEASE AND INDEMNITY..................................................25
30. DISPUTE RESOLUTION.....................................................25
31. CONFIDENTIAL INFORMATION AND PUBLICITY.................................26
32. ACCESS.................................................................27
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33. NATURE OF RELATIONS....................................................27
34. AGREEMENT PREVAILS.....................................................27
35. ASSIGNMENT.............................................................27
36. NOTICE.................................................................27
37. COSTS..................................................................28
38. GOVERNING LAW..........................................................28
39. COUNTERPARTS...........................................................28
40. LICENSED FUNDS.........................................................29
41. LIMITATIONS OF LIABILITY...............................................31
ANNEXURE-A - INITIAL CAPITAL STRUCTURE........................................38
ANNEXURE B - BUSINESS PLAN....................................................39
ANNEXURE C - CRITICAL BUSINESS MATTERS........................................40
ANNEXURE D - CRITICAL SHAREHOLDER MATTERS.....................................41
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SHAREHOLDERS AGREEMENT
PARTIES
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1. PRAXIS PHARMACEUTICALS INC of 00 Xxxx Xxxxxxxx, Xxxx Xxxx Xxxx, Xxxx,
Xxxxxx Xxxxxx xx Xxxxxxx 84101, Facsimile: x0 000 000 0000 (PRAXIS US)
2. PERPETUAL TRUSTEES NOMINEES LIMITED ABN 99 000 341 533 of Level 8, 00
Xxxxxxxxxxx Xxxxxx, Xxxxxx, XXX 0000, in its capacity as trustee for
The Australian Bioscience Trust constituted by a trust deed dated 20
August 1998, Facsimile: 02 8256 1419 (TRUSTEE)
3. ROTHSCHILD BIOSCIENCE MANAGERS LIMITED ABN 54 072 515 247 in its
capacity as manager of the Australian Bioscience Trust and in its
capacity as trustee of Rothschild Bioscience Ventures II of Level 00, 0
X'Xxxxxxx Xxxxxx, Xxxxxx, XXX 0000, Facsimile: 02 9323 2000
(ROTHSCHILD)
4. CIBC AUSTRALIA VC FUND LLC, a Delaware limited liability company, in
its capacity as general partner of the Australia Venture Capital Fund
L.P. of 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, XXX (AVCF)
5. CM CAPITAL INVESTMENTS PTY LTD ACN 098 048 830 of Level 2, Telstra
House, 000 Xxxxx Xxxxxx, Xxxxxxxx, XXX 0000, as trustee for CM Capital
Venture Trust No.3 Facsimile: 07 3221 5933 (CM CAPITAL)
6. MOOROOLBARK TECHNOLOGY PTY LTD ABN 60 080 904 892 of Level 1, 000
Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, XXX 0000 in its capacity as trustee for
the Pharmaxis Investment Trust constituted by a trust deed dated on or
about the date of this agreement, Facsimile: 03 8646 3899 (MOOROOLBARK)
7. THE AUSTRALIAN NATIONAL UNIVERSITY, a body corporate established under
the Australian National University Act of 1991 ABN 52 234 063 906 of
The Australian National University, Investment Office, Building 10C,
Acton, ACT 0200, Facsimile: 02 6125 8795 (ANU)
8. PHARMAXIS PTY LTD ABN 75 082 811 630 of 00 Xxxxxx Xxxxxx Xxxxxx,
Xxxxxxxx, XXX 0000, Facsimile: 02 6279 5444 (COMPANY)
9. XX XXXXXXX XXXXXX of 00 Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx, XXX
0000 (XXXXXX) and XX XXXXX XXXXXXXX of 00 Xxxxxx Xxxxxx, Xxxxxx, XXX
0000 (CHARLTON) (together called the FOUNDERS)
INTRODUCTION
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A. The parties wish to provide for the terms and conditions on which the
parties have agreed to operate the Company in the future.
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B. The parties also wish to regulate as between themselves certain matters
relating to their shareholdings in the Company.
C. The Company has agreed to become a party to give effect to those terms
of this agreement to which it may lawfully give effect. For the
avoidance of doubt, nothing in clauses 22 to 24 (inclusive) is to be
read or construed as requiring any action or participation by the
Company if to do so would be contrary to any provision of the
Corporations Act 2001.
D. The parties agree to work together to maximise the value of the Company
with a view to effecting a trade sale or offering shares to the public
as soon as practicable and market conditions permitting.
OPERATIVE CLAUSES
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1. DEFINITIONS
In this agreement:
ACP SHAREHOLDER means a person that holds ACP Shares and includes a
party who holds the beneficial interest in ACP Shares registered in the
name of another person as nominee for that Party;
ACP SHARES means Series A converting preference shares in the capital
of the Company;
ASSOCIATED ENTITY means:
(a) in respect of a corporate shareholder, an entity that is a
related body corporate of the Shareholder as defined in
section 50 of the Corporations Act 2001;
(b) in respect of a shareholder who holds shares as trustee, any
replacement trustee of the relevant trust;
(c) in respect of a shareholder, a nominee or custodian of the
shareholder (or replacement nominee or custodian); and
(d) in respect of the Trustee and Rothschild, a fund managed by
Xxxxxxxxxx or a related body corporate of Rothschild and in
respect of CM Capital and Mooroolbark, a fund managed by CM
Capital or Mooroolbark respectively or a related body
corporate of either of those companies;
(e) in respect of AVCF, any replacement general partner of AVCF
and any fund managed by CM Capital Investments Pty Ltd or any
of its related bodies corporate;
BOARD means the board of Directors of the Company;
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BUSINESS means the business of drug research and development and
disease specific diagnosis and therapies, and the commercialisation of
such drugs and therapies;
BUSINESS DAY means any day except a Saturday or a Sunday or other
public holiday in the Australian Capital Territory;
BUSINESS PLAN means the business plan of the Company as amended from
time to time under clause 18;
BCP SHAREHOLDER means a person that holds BCP Shares and includes a
Party who holds the beneficial interest in BCP Shares registered in the
name of another person as nominee for that Party;
BCP SHARES means Series B converting preference shares in the capital
of the Company;
CHIEF EXECUTIVE OFFICER means the Chief Executive Officer of the
Company appointed under clause 14;
DILUTED CAPITAL means, at any time, the issued ordinary share capital
of the Company assuming the conversion at that time of all issued ACP
Shares and BCP Shares into Ordinary Shares;
DIRECTOR means a director of the Company appointed under clause 11 (or
his or her alternate) and DIRECTORS means any or all such appointees
(or their alternates);
DIRECTORS SPECIAL MAJORITY means, in relation to a resolution of
Directors, a resolution passed by a majority of all Directors as well
as a majority of all Directors nominated by the ACP and BCP
Shareholders;
EMPLOYEE SHARE OPTION PLAN means the Executive and Staff Option Plan
adopted by the Company on 30 March 2001;
EXECUTIVE DIRECTORS means a Director who is also a full time executive
of the Company;
FINANCIAL CONTROLLER means the chief financial officer or controller of
the Company and its subsidiaries appointed under clause 15;
FINANCIAL YEAR means:
(a) the period beginning from the start of the term of this
agreement and ending on the following 30 June;
(b) after the first financial year, each period of 12 months
ending 30 June; and
(c) in the last year of the term of this agreement the period
starting on the preceding 1 July and ending on the date this
agreement ends;
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IIF MANAGEMENT LICENCE means an IIF Program management licence executed
between the Industry Research and Development Board on behalf of the
Commonwealth of Australia and a party to this Agreement;
IIF PROGRAM means the Innovation Investment Fund Program established by
the Commonwealth of Australia under the Industry Research and
Development Act 1986 (Cth);
LICENCE AND RESEARCH & DEVELOPMENT AGREEMENTS means the Licence and
Research & Development Agreement entered into between Anutech Pty
Limited and Praxis US dated 27 October 1997 and the Addendum to the
Licence and Research & Development Agreement dated 8 October 1998;
LICENSED FUND means a fund of whatever nature, and whether incorporated
or not:
(a) which, or the manager of which, is to be or has been granted
an IIF Management Licence; and
(b) the manager or trustee of which is a shareholder of the
Company;
LIQUIDITY EVENT means:
(a) a disposal of the whole or substantially the whole of the
property, business and undertaking of the Company;
(b) an order being made for the winding up or dissolution of the
Company;
(c) a liquidator or provisional liquidator being appointed to the
Company; or
the Company being otherwise wound up, deregistered, dissolved or
liquidated;
NOMINEE DIRECTOR means a nominee Director appointed by a Shareholder
under clause 11.1.3, 11.1.4 or 11.1.5;
ORDINARY SHARES means ordinary shares in the issued capital of the
Company;
ORDINARY SHAREHOLDER means a person that holds Ordinary Shares and
includes a party who holds the beneficial interest in Ordinary Shares
registered in the name of another person as nominee for that Party;
SECRETARY means the secretary of the Company appointed under clause 15;
SHAREHOLDER means a person that holds shares in the Company from time
to time being either Ordinary Shares, ACP Shares or BCP Shares;
SPECIAL MAJORITY means, in relation to a resolution of Shareholders, a
resolution passed by:
(a) more than 50% of the votes cast by Ordinary Shareholders; and
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(b) more than 80% of the votes that may be cast by ACP Shareholders and BCP
Shareholders; and
TRANSACTION DOCUMENTS means this agreement, the relevant share
subscription agreement dated on or around the date of this agreement
pursuant to which the each BCP Shareholder subscribes for BCP Shares
and the Company's constitution.
2. INTERPRETATION
In this agreement, unless the context otherwise requires:
2.1 singular includes plural and plural includes singular;
2.2 words of one gender include any gender;
2.3 reference to legislation includes any amendment to it, any
legislation substituted for it, and any subordinate
legislation made under it;
2.4 reference to a person includes a corporation, firm and any
other entity;
2.5 reference to a party includes that party's personal
representatives, successors and permitted assigns;
2.6 headings do not affect interpretation;
2.7 a provision must be read down to the extent necessary to be
valid. If it cannot be read down to that extent, it must be
severed;
2.8 if a thing is to be done on a day which is not a Business Day,
it must be done on the Business Day after that day;
2.9 another grammatical form of a defined expression has a
corresponding meaning;
2.10 an expression defined in the Corporations Act 2001 has the
meaning given by the Corporations Act 2001;
2.11 a reference to a capital reconstruction includes a reference
to a consolidation, subdivision, reduction or return of
return of capital; and
2.12 no rule of construction applies to the disadvantage of a party
because that party put forward this document or any portion of
it.
3. SHAREHOLDER AGREEMENT
3.1 The Shareholders agree that the business and affairs of the
Company are to be conducted in a manner consistent with the
terms of this agreement.
3.2 The Company will procure that all holders of options in the
Company (as set out in Part 2 of Annexure A) agree to be bound
by the terms of this agreement as
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Shareholders if and when they convert those options to
Ordinary Shares. In that regard, it is noted that:
3.2.1 the terms of the Employee Share Option Plan and the
issue terms of all options currently on issue, require
the optionholders to enter into any shareholders
agreement, or enter a deed of accession to any
shareholders agreement, that is in existence on the
date of exercise of those options; and
3.2.2 that is sufficient compliance with the terms of this
clause in respect of shares to be issued on exercise
of those options.
3.3 Those of the parties to this agreement that are parties to the
shareholders agreement dated 15 October 1999 and the
supplementary shareholders agreement dated 4 April 2001,
hereby agree that those agreements are terminated and are of
no further force or effect without prejudice to any accrued
rights of the parties to the date of termination.
3.4 If the Company issues additional shares in accordance with
clause 21.2, any party that is not already a party to this
agreement must accede to this agreement and accordingly must
agree to be bound by the terms of this agreement, such
accession agreement to be in a form and substance acceptable
to the Company.
4. TERM
4.1 The term of the arrangements between the Shareholders set out
in this agreement starts on the date of this agreement.
4.2 Subject to the other provisions of this agreement, this
agreement terminates on the first to occur of the following:
4.2.1 one Shareholder owning all of the shares in the
Company following a transfer(s) under and in
accordance with this agreement;
4.2.2 the Company is wound up and its surplus assets (if
any) distributed to the Shareholders;
4.2.3 the Shareholders agree this agreement is at an end;
or
4.2.4 an initial public offering of the shares in the
Company and a listing of those shares on a recognised
securities exchange.
4.3 Unless this agreement provides to the contrary, a former
Shareholder is not bound by this agreement from the time it
ceases to hold shares in the Company. However, the former
Shareholder still has the rights and obligations that accrued
before that time.
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5. INCORPORATION
5.1 The Company is incorporated as a proprietary company.
5.2 The Company may change its status to a public company by
resolution passed in accordance with the Corporations Act 2001
and subject to approval of a Directors Special Majority
resolution.
6. NAME
6.1 The name of the Company is Pharmaxis Pty Ltd.
6.2 The Company may change its name by resolution passed in
accordance with the Corporations Act 2001 and subject to
approval of a Directors Special Majority resolution.
7. CONSTITUTION
7.1 The Company's internal management is governed by a
constitution.
7.2 Despite clause 7.1 and as between the Shareholders, this
agreement prevails over the Company's constitution to the
extent of any inconsistency. The Shareholders must cause the
Company to be operated in a manner consistent with this
agreement despite any contrary rights they may otherwise have
under the Company's constitution.
7.3 Each Shareholder agrees that it will not seek to enforce any
rights it may have under the Company's constitution to the
extent inconsistent with this agreement.
8. REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
8.1 Unless the Board otherwise determines, the registered office
of the Company is Level 0, 00 Xxxxxx Xxxxxx Xxxxxx, Xxxxxxxx,
XXX 0000.
8.2 Unless the Board otherwise determines, the principal place
from which the Company conducts its business is Level 7, 00
Xxxxxx Xxxxxx Xxxxxx, Xxxxxxxx, XXX 0000.
9. COMMERCIAL OBJECTIVES
9.1 The commercial objectives of the Company are to:
9.1.1 carry on the Business;
9.1.2 develop and expand the Business in accordance with
the Business Plan;
9.1.3 maximise the value of the Company and each
Shareholder's interest in the Company; and
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9.1.4 do everything else the Shareholders consider will
attain or further these purposes.
9.2 It is the intention of the Shareholders that the Company
undertake an initial public offering within 12 months of the
date of this agreement. If this is not achieved, Shareholders
intend that the Company should continue to attempt to
undertake an initial public offering or any other exit
including a trade sale, amalgamation or merger (EXIT) within 4
years of the date of this agreement (EXIT DATE). All Exit
opportunities are to be considered on their merits. If an Exit
is not achieved by the Exit Date, any ACP Shareholder or BCP
Shareholder holding more than 10% (or ACP Shareholders or BCP
Shareholders collectively holding more than 10%) of Diluted
Capital will be entitled to give a notice in writing to the
Shareholders (with a copy to the Company) requiring all
Shareholders in good faith to:
9.2.1 endeavour to agree to a strategy to achieve an Exit as
soon as reasonably practicable that will maximise the
value of the Company (EXIT NOTICE); and
9.2.2 secure the Board's approval of that strategy insofar
as the implementation of the strategy requires action
by the Company and the Company can lawfully implement
it under the Corporations Act 2001.
9.3 If Shareholders agreement and, to the extent required Board
approval, does not occur within 1 month of the date that the
Exit Notice was issued, the Shareholders may, at the
reasonable expense of Company, appoint an experienced
investment banker or stockbroker of good standing (ADVISER) to
recommend what the Adviser believes to be the most appropriate
Exit strategy and timing having regard to all applicable
circumstances and the objective of maximising Shareholder
value.
9.4 Each shareholder and, so far as it is lawfully able to do
so, the Company must do all things necessary to implement (as
applicable):
9.4.1 the Exit strategy approved by the Board within the
timetable set out in that approval under clause 9.2;
or
9.4.2 the recommendations made by the Adviser under clause
9.3,
including, executing all necessary documents or agreements and
voting in favour of the approved or recommended Exit at any
general meeting of the Company.
10. SOLE COMMERCIAL VEHICLE
10.1 The Company and its subsidiaries are to be the exclusive
vehicle for furthering the commercial objectives of the
Company under clause 9.
10.2 The Company and any subsidiaries of the Company are to own and
carry on the business for which they were respectively
incorporated and must enter into
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contracts and other obligations in their own name without
guarantees, security or other support from the Shareholders.
10.3 The Company will carry on its business without any Shareholder
being required to give any guarantee, indemnity, mortgage or
other security in favour of financiers of the Company.
11. DIRECTORS
11.1 The Company is to have at least 5 Directors, comprising:
11.1.1 an independent Chairman;
11.1.2 the Chief Executive Officer;
11.1.3 one director appointed by Xxxxxxxxxx;
11.1.4 one director appointed by CM Capital; and
11.1.5 one director appointed by the founding Shareholder,
Praxis USA (as long as it is a Shareholder holding at
least 10% of Diluted Capital).
11.2 The Board may, in addition to the Directors specified in
clause 11.1, appoint one further independent director as a
Director by Directors Special Majority resolution. That
initial further independent director must first be approved,
such approval not to be unreasonably withheld or delayed, by
Mooroolbark.
11.3 The initial Directors of the Company are to be:
11.3.1 Xxxxx Xxxxxx, as the independent Chairman;
11.3.2 Xxxx Xxxxxxxxx, as the Chief Executive Officer;
11.3.3 Xxxxxxxx Xxxxx as the Rothschild nominee;
11.3.4 Xxxxxx Xxxxxx Xxxxxxxx as the CM Capital nominee; and
11.3.5 Xxxxx Xxxxxxxx as Praxis US's nominee.
11.4 Subject to clause 11.5, a Nominee Director may only be
removed, replaced, or removed and replaced, by his or her
appointor, by notice given to the Company and the Board. Each
other Director will be given the courtesy of approving (such
approval not to be unreasonably withheld) a new or replacement
Nominee Director under this clause before their appointment is
made. The independent director appointed under clause 11.2 may
be replaced by Special Directors Resolution.
11.5 A Director ceases to be a Director if:
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11.5.1 the Director is a Director independent of any
Shareholders and the Shareholders resolve to remove
him or her;
11.5.2 the Corporations Act 2001 so provides;
11.5.3 the Director resigns by notice to the Company; or
11.5.4 the Director becomes mentally incapable and the
Director's estate or property has had a personal
representative or trustee appointed to administer it.
11.6 By prior notice in writing to the Company and to the Board, a
Director may appoint an alternate to act in the Director's
place:
11.6.1 for a specific period or until a specified event; or
11.6.2 whenever the relevant appointing Director is unable
to attend to his or her duties by reason of absence,
illness or otherwise.
Each other Director will be given the courtesy of approving
(such approval not to be unreasonably withheld) an alternate
Director under this clause before their appointment is made.
An alternative Director should be paid (if applicable) by
their appointee.
11.7 Unless expressly prohibited from doing so by statute or law, a
Nominee Director may:
11.7.1 pay special regard in exercising his or her powers
and performing his or her duties, to the interests
of the Director's appointor; and
11.7.2 disclose any and all information received by the
Director in his capacity as a Director of the Company
on a 'needs to know basis' to his or her appointing
Shareholder in connection with:
(a) the appointing Shareholder's involvement in
this agreement; or
(b) mandatory reporting or disclosure obligations
under statute or law to the extent the material
to be disclosed cannot be kept 'commercial in
confidence' or kept confidential on the basis
of legal professional privilege.
11.8 A Director need not be a member of the Company.
11.9 Mooroolbark is entitled for so long as it is a BCP
Shareholder, by notice given to the Company, to appoint one
person to attend Board meetings as an observer (at its own
cost).
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12. CHAIRMAN OF THE BOARD
12.1 A person ceases to hold office as chairman if they cease to be
a Director of the Company for any reason.
12.2 The chairman of the Board may be removed, replaced or removed
and replaced by Directors Special Majority resolution.
12.3 In the event that the Chairman is absent from a meeting, the
Chairman may nominate another director to act as chairman of
the meeting.
13. BOARD MEETINGS
13.1 The Directors may meet and determine the place at which they
meet and the manner in which meetings are coordinated as
they decide.
13.2 Meetings may be held by any means of telecommunication.
13.3 Unless all the Directors otherwise agree, there must be at
least 9 Board meetings in any calendar year.
13.4 A Director may at any time, and the Secretary must at the
request of a Director, call a Board meeting.
13.5 Each Director must be given at least 7 days' written notice of
a Board meeting and be provided with the agenda at that time.
This requirement may be waived for a particular meeting by all
Directors in office at the time.
13.6 The agenda for regular Board meetings must include the
following items which are to be sent to the Directors prior
to the meeting:
13.6.1 a report and appropriate commentary from the Chief
Executive Officer or other officer responsible for day
to day activities, operations and administration of
the Company;
13.6.2 a financial report and appropriate commentary from the
financial controller or other officer of the Company
responsible for financial control including a balance
sheet, profit and loss statement, and cash flow
statement showing for the relevant month and Financial
Year:
(a) actual against budget with an explanation of
variances; and
(b) forecast actual against budget for remaining
months with an explanation of forecast
variances;
(c) draft minutes of Board meetings since the last
regular Board meeting in accordance with clause
13.12; and
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(d) minutes of any Board committee meetings held
since the last regular Board meeting.
13.7 The Board may require additional reports to be on the agenda
and be included in the accompanying Board papers.
13.8 A quorum for a Board meeting is 4 Directors, and must include
at least one Xxxxxxxxxx'x Nominee Director , at least one CM
Capital Nominee Director , and at least one Praxis US Director
(as long as it is a Shareholder holding at least 10% of
Diluted Capital either in its own right or together with the
interests of any other BCP Shareholders whose proxy they may
hold).
13.9 Each Director (or his or her alternate) has one vote at a
Board meeting.
13.10 Unless this agreement requires otherwise, a decision of the
Board is made by a majority of the votes cast by the Directors
present at the meeting (or their alternate Directors if
applicable). If there is an equality of votes, the Chairman
does not have a casting vote in addition to his or her
deliberative vote.
13.11 The Secretary must be present at and take minutes of
proceedings at each Board meeting including:
13.11.1 all motions;
13.11.2 the result of each vote; and
13.11.3 any other formal action of the Board.
13.12 The Secretary must send a copy of the draft minutes to each
Director no later than 7 days before the next Board meeting
for approval at that meeting.
13.13 Once approved by the Board, the minutes must be signed as a
correct record of proceedings by the chairman of the meeting.
13.14 A written resolution signed by each Director (or his or her
alternate) has the same effect as if it had been passed at a
Board meeting properly called and held at the time when the
resolution was last signed by a Director (or alternate
Director). The resolution may consist of several documents in
the same form, each signed by one or more Directors (or
alternate Directors).
13.15 Independent Directors may be paid reasonable Directors' fees.
13.16 The initial Directors' fees payable in aggregate under clause
13.15 will be:
13.16.1 $50,000 p.a, to be paid to the independent chairman;
and
13.16.2 $25,000 p.a. for each other independent Director.
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13.17 The amount of Directors' fees payable under clause 13.16
may be increased from time to time by a Directors Special
Majority resolution.
13.18 Nominee Directors and Executive Directors are not entitled to
any Directors' fees. The appointing Shareholders must pay any
costs associated with its respective Nominee Director acting
as a Director, apart from those costs set out in clause 13.19.
13.19 The Company must reimburse all Directors (including Nominee
Directors) for their reasonable receipted expenses in
attending Board meetings and general meetings that are held
outside their city of residence.
13.20 The Company must offer each person who consents to be a
Director, a deed of access to documents, and indemnity in
substantially the same form as the deed of access to documents
and indemnity granted to the other Directors at the date of
this agreement or other similar form approved by the Board
from time to time having regard to applicable legal
constraints.
14. CHIEF EXECUTIVE OFFICER
14.1 Subject to prior approval by Directors Special Majority
resolution, the Board may appoint, and remove and replace,
from time to time a person to be the Chief Executive Officer
of the Company and any subsidiaries on such terms and
conditions as the Board may by Directors Special Majority
resolution approve.
14.2 The Chief Executive Officer will be responsible for:
14.2.1 the day to day conduct of the business and affairs of
the Company;
14.2.2 any matters for which the Chief Executive Officer is
responsible under this agreement; and
14.2.3 any other matters the Board decides should be the
responsibility of the Chief Executive Officer.
15. FINANCIAL CONTROLLER AND SECRETARY
15.1 Subject to prior approval by a Directors Special Majority
resolution, the Chief Executive Officer may appoint, and
remove and replace, one or more persons to be the chief
financial officer or controller of the Company and its
subsidiaries on such terms and conditions as the Chief
Executive Officer may recommend and the Board may approve.
15.2 The Financial Controller is also the Company Secretary and is
responsible for general bookkeeping, accounting and financial
control with respect to the Company and its subsidiaries.
15.3 The Secretary is responsible for all clerical and company
secretarial duties.
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15.4 The Financial Controller is also to be the public officer of
the Company for the purpose of taxation legislation.
16. AUDITORS
16.1 The Company must appoint a registered company auditor
independent of the Shareholders to be the auditor of the
Company on terms that include the following:
16.1.1 the auditor will deliver copies of the audited
financial statements and accompanying audit report
for each Financial Year to each Shareholder on or
about the time they are delivered to the Company; and
16.1.2 the auditor will be available for discussions with
the Shareholders in relation to the audited financial
statements and accompanying audit report for each
Financial Year or any matters arising during the
course of the audit (whether or not raised with the
Board).
16.2 The Company may remove and replace the appointed auditor with
the approval of a Directors Special Majority resolution.
16.3 For the purpose of this clause 16, the initial auditor of the
Company is Duesburys.
17. ACCOUNTING AND INFORMATION
17.1 The Company's financial year ends on 30 June in each year.
17.2 Unless the Shareholders otherwise agree, the management
accounts and financial statements of the Company must be
prepared in accordance with Australian generally accepted
accounting principles and practices consistently applied.
17.3 The Company must provide Shareholders with the following:
17.3.1 the audited financial statements of the Company
within two months after the end of each Financial
Year;
17.3.2 unaudited and unreviewed monthly management accounts
of the Company, within 21 days after the end of each
month; and
17.3.3 a draft annual business plan and related budgets for
each Financial Year for approval, prior to the
commencement of that Financial Year.
17.4 The Company must also provide to each Shareholder copies of
all quarterly technical and key financial indicator reports
prepared by management, within 14 days after the end of the
quarter to which they relate.
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18. CONDUCT OF BUSINESS
18.1 The Business is to be conducted in accordance with an annual
business plan adopted by the Board prior to the commencement
of each Financial Year with the approval of a Directors
Special Majority resolution.
18.2 The Business Plan for the period to 30 June 2002 is to be as
set out in Annexure B.
18.3 Subject to clause 19, the Board is responsible for:
18.3.1 the overall implementation and monitoring of the
Business Plan as well as the business and affairs of
the Company generally; and
18.3.2 generally setting the strategic direction and
policies of the Company.
18.4 The Company will procure from time to time that all key
executives enter into an appropriate employment agreement, and
option agreement (if applicable), acceptable to the Board.
18.5 The Company must maintain with a well established and
reputable insurer:
18.5.1 directors and officers liability insurance; and
18.5.2 adequate insurance coverage in relation to its assets
and business against all risks and for amounts for
which a prudent company carrying on the same or
similar business would insure,
on terms acceptable to the Board.
19. CRITICAL BUSINESS MATTERS AND CRITICAL SHAREHOLDER MATTERS
19.1 Despite any other provision of this agreement, a decision by
the Board or the Company in relation to the critical business
matters set out in Annexure C must be approved by a Directors
Special Majority resolution.
19.2 If a matter requiring a Directors Special Majority resolution
under clause 19.1 or any other provision of this agreement,
also requires approval of Shareholders under the Corporations
Act 2001, the Director's Special Majority requirement is in
addition to the required majority under that Act.
19.3 Despite any other provision of this agreement (excluding
clause 21.7 and 25.4), the Board must refer the critical
shareholder matters set out in Annexure D to the Shareholders
of the Company.
19.4 Subject to clause 9, in addition to any requirement for
shareholder approval under the Corporations Act 2001, the
critical shareholder matters set out in Annexure D
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15
must be approved by ACP and BCP Shareholders holding at least
80% of the votes that may be cast by ACP and BCP Shareholders.
20. GENERAL MEETINGS
20.1 A quorum for a general meeting is 1 representative of each
Shareholder that holds at least 10% of Diluted Capital either
in its own right or together with the interests of any other
Shareholders whose proxy they may hold.
20.2 Each Shareholder has one vote for every Share it holds,
whether they be ordinary shares, ACP Shares or BCP Shares.
20.3 The chairman of the Board is the chairman of a general
meeting.
20.4 The chairman of a general meeting does not have a casting
vote.
20.5 Unless this agreement or the Corporations Act 2001 requires
otherwise, resolutions considered at a meeting are ordinary
resolutions determined by simple majority of votes.
20.6 If there is an equality of votes on a resolution, the
resolution is not passed.
20.7 A proxy, attorney or other representative of a member at a
general meeting need not be a member of the Company.
20.8 In accordance with the Corporations Act 2001, the Company
must give at least 21 days notice of any general meeting
unless otherwise unanimously agreed by Shareholders.
21. CAPITAL STRUCTURE
21.1 The initial share capital of the Company is to be as set out
in part 1 of Annexure A.
21.2 Subject to clauses 21.3, 21.6 and 21.7, the Company must not
issue additional shares, or grant a right or option to
subscribe for additional shares unless approved by ACP and BCP
Shareholders holding at least 80% of the votes that may be
cast by ACP and BCP Shareholders.
21.3 If the Company with the approval of a Directors Special
Majority resolution, wishes at any time to issue additional
ordinary shares or securities convertible into ordinary shares
(SECURITIES) (other than under the Employee Share Option Plan
or as consideration for an acquisition of a business or
business entity), the Company must first offer to each
shareholder a percentage of those securities equal to the
ordinary shares, ACP Shares or BCP Shares held by the
Shareholder as a percentage of Diluted Capital. In the case of
CM Capital the offer can be accepted by CM Capital or a
nominee of CM Capital.
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16
21.4 If any securities remain after applying clause 21.3, the
Company may offer the remaining securities to such person(s)
as the Board think fit subject to the subscribers agreeing to
be bound by this agreement by an instrument acceptable to the
Board.
21.5 The parties will negotiate in good faith changes to this
agreement to accommodate an issue of any securities under
clauses 21.3 and 21.4.
21.6 The Company may from time to time issue options over Ordinary
Shares under the Employee Share Option Plan adopted by the
Board (as amended by the Board from time to time), without
complying with clauses 21.2 to 21.5.
21.7 Despite any other provision in this agreement, if agreed as a
Directors Special Majority resolution, the Company may issue
securities to such persons as the Board thinks fit, subject to
the subscriber agreeing to be bound by this agreement by an
instrument acceptable to the Board, if the issue of securities
is required to undertake an initial public offering which
would allow conversion of ACP and BCP Shares pursuant to
clause 25.2.
21.8 The number of ordinary shares over which options have been
issued as at the date of this agreement, is set out in Part 2
of Annexure A. In addition, approval to issue a further
212,000 options to acquire ordinary shares of the Company
under the terms of the Company's Employee Share Option Plan
has been granted by the Shareholders. Those unissued options
may be issued at any times determined by the Board and in
accordance with the Employee Share Option Plan.
22. PRE-EMPTIVE RIGHTS
22.1 Unless otherwise agreed by Special Majority resolution of
Shareholders, a Shareholder may only transfer the legal or
beneficial interest in its shares in the Company in accordance
with this clause.
22.2 If a Shareholder wishes to transfer its shares at any time
(OFFEROR), it must first give to all other Shareholders
(OFFEREES) a notice (PRE-EMPTION NOTICE), specifying that it
wishes to sell some or all of its shares in the Company at the
price per share nominated by the offeror (OFFER PRICE).
22.3 A pre-emption notice must include:
22.3.1 a copy of any available valuation (where one has been
prepared) of the shares obtained by the offeror
in the preceding 12 months; and
22.3.2 details of any third party offer, proposal or
invitation the offeror has received in the preceding
12 months:
(a) that another party is interested in or willing
to acquire the shares;
(b) that indicates a willingness to:
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17
(i) acquire in a trade sale the Company or
its Business;
(ii) cause the Company to be merged or
otherwise acquired; or
(iii) cause the Company to be floated or
otherwise the subject of a public
offering; or
(c) that states or implies a value for the
Company's shares.
22.4 Within 14 days after the giving of the pre-emption notice, the
offerees may notify the offeror whether or not they wish to
buy the offeror's shares in the Company the subject of the
pre-emption notice at the offer price and the number of shares
they are willing to acquire.
22.5 If any of the offerees fail to give any notice of acceptance
or rejection within the 14 days permitted by clause 22.4,
those offerees are deemed to have rejected the offeror's offer
on the 14th day of the period allowed for acceptance or
rejection.
22.6 If any offerees accept the offerors' offer, the offeror must
sell the offerors' shares to the accepting offerees who wish
to buy them. If two or more offerees are willing to buy shares
and there are not enough shares available to satisfy all
acceptances, then each of the accepting offerees is to be
allocated (in the first instance) a number of the offeror's
shares that is the lesser of:
22.6.1 the maximum number of shares each of the offerees
indicated they are willing to accept; and
22.6.2 the same proportion that each accepting offeree's
existing shareholding in Diluted Capital bears to the
total of all accepting offerees' existing
shareholdings in the Diluted Capital (as the case may
be).
22.7 Clause 22.6 is to be reapplied until either there are no
further shares to allocate or all accepting offerees
acceptances are filled.
22.8 Subject to clause 23, to the extent the offeror's shares are
not sold under the above procedures, the offeror may then sell
the remaining Shares referred to in the pre-emption notice:
22.8.1 within 6 months after the end of the procedure (and
if not sold within that time, the shares cannot be
transferred without recomplying with this clause 22);
and
22.8.2 at a price no more favourable to the buyer than the
offer price and provided the transferee agrees to be
bound by this agreement by an instrument in form and
substance acceptable to the Board.
22.9 A sale and transfer of shares between the Shareholders to
which this clause applies occur on the following terms:
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18
22.9.1 the legal and beneficial interest in the shares is
sold free of encumbrances;
22.9.2 closing takes place at the registered office of the
Company 30 days after the sale contract is made or
deemed made;
22.9.3 title to the shares passes from the selling
Shareholder to the buying Shareholder at closing; and
22.9.4 the purchase price is payable at closing by the
buying Shareholder to the selling Shareholder by bank
cheque or other in immediately available funds.
22.10 On receipt of all moneys due in accordance with clause 22.9
the selling Shareholder must deliver to the buying
Shareholder:
22.10.1 the share certificates for the shares sold and a
transfer in common form executed by the selling
Shareholder in favour of the buying Shareholder with
an irrevocable proxy or power of attorney to vote the
shares at any general meeting with the name of the
proxy or attorney blank; and
22.10.2 if the selling Shareholder no longer holds any shares
in the Company or is no longer entitled to nominate a
Director, the resignation of any Director that is a
nominee of the selling Shareholder.
22.11 Despite the preceding provisions of this clause 22, a
Shareholder may transfer all of its shares to the ultimate
beneficial owner of the shares without complying with the
pre-emptive rights provisions in this clause 22, provided that
the transfer is the transfer of the entire legal interest in
the shares free from all encumbrances and the transferee
agrees to be bound by this agreement by an instrument in form
and substance acceptable to the Board.
22.12 Despite the preceding provisions of this clause 22, a
Shareholder may transfer all of its shares to an Associated
Entity without complying with the pre-emptive rights
provisions in this clause 22, provided that the Associated
Entity:
22.12.1 agrees in writing to be bound by the terms of this
agreement by an instrument in form and substance
satisfactory to the Board; and
22.12.2 in the case of corporate transferring shareholder
continues at all times to be an Associated Entity of
the transferring Shareholder so that if the
Associated Entity ceases to be an Associated Entity
of the transferring Shareholder, then it will be
deemed to have given a pre-emption notice under
clause 22.3 for sale of its shares at fair market
value which will then be deemed to be the offer price
for the purpose of clause 22.3.
22.13 Despite the preceding provisions of this clause 22.2-22.10, CM
Capital and AVCF may each transfer all or some of its shares
to the other, or a nominee, without
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19
complying with the pre-emptive rights provisions in this
clause 22, provided that the transferee continues to be bound
by this agreement.
22.14 Despite the preceding provisions of this clause 22, AVCF may
transfer some or all of its shares to a partner in the
Australia Venture Capital Fund L.P. without complying with the
pre-emptive rights provisions in clause 22, provided that the
transfer is the transfer of the entire legal interest in the
shares free from all encumbrances and the transferee agrees to
be bound by this agreement by an instrument in a form
acceptable to the Board.
22.15 For so long as AVCF holds shares in the Company, no change in
the partners of AVCF shall be regarded as a transfer of an
interest in shares in the Company and the pre-emptive rights
provision in this clause 22 shall not apply in the event of a
change in the partner of AVCF.
22.16 If a Shareholder who is not an ACP Shareholder or a BCP
Shareholder acquires ACP Shares or BCP Shares (other than an
Associated Entity of an ACP Shareholder or BCP Shareholder
respectively) under this clause 22, that Shareholder must on
acquisition of those shares immediately elect to convert them
to ordinary shares.
22.17 The Founders agree with the other Shareholders, in respect of
their shareholding in Praxis US at any time, that they will
not:
22.17.1 directly or indirectly dispose of the legal or
beneficial title to those stock or other securities in
Praxis US (whether by way of transfer, assignment,
encumbrance, declaration of trust or otherwise
whatever) without the unanimous consent of the Nominee
Directors for the time being of the ACP Shareholders
and BCP Shareholders, which consent may be given or
withheld in the absolute discretion of those Nominee
Directors; or
22.17.2 initiate, approve of, consent to or acquiesce in
(whether in their capacity as security holders in
Praxis US, as officers of Praxis US or in any other
capacity whatever) any transaction:
(a) with or involving Praxis US;
(b) involving their stock or other security
holdings at any time in Praxis US;
(c) involving any other instruments convertible
into securities of any kind (issued or to be
issued) in Praxis US; or
(d) otherwise involving the assets, business or
undertaking of Praxis US including without
limitation, Praxis US shares in the Company,
with the intent, that has the purpose or that has the
effect (whether or not intended or with purpose), of
circumventing the pre-emptive rights
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20
provisions of this agreement with a view to giving
third parties control or influence over the Company
contrary to the intent of the pre-emptive rights
provisions of this agreement.
22.18 In order to ensure part compliance with clause 22.14, the
Founders agree to either:
22.18.1 irrevocably deliver the original certificates for
their stock and other securities in Praxis US to the
Company for the purpose of holding them in safe
custody to ensure compliance with clause 22.14; or
22.18.2 provide evidence to the Board, in a form acceptable
to the Board, that the original stock, other security
certificates or other applicable arrangements
relating to securities convertible into Praxis US
stock or other Praxis US securities, have appropriate
legends setting or referring to the restrictions
contained in clause 22.14 of this agreement.
23. TAG-ALONG RIGHTS
23.1 If a Shareholder (SELLING SHAREHOLDER) is entitled to and
wishes to sell shares to a third party as permitted under
clause 22.8 (THIRD PARTY), it must before that sale give
notice to each other Shareholder (TAG-ALONG OFFEREES) of its
intention to sell (TAG-ALONG NOTICE) and the price at which
they are to be sold to the third party.
23.2 Within 14 days of receipt of a tag-along notice, the tag-along
offerees may notify the selling shareholder that they wish to
sell a percentage of their shares that is the same percentage
as the shares to be sold by the selling shareholder bears to
the total number of shares held by the selling shareholder at
the same price as the selling shareholder intends to sell its
shares.
23.3 If any tag-along offerees give the selling shareholder notice
under clause 23.2, the selling shareholder may not sell its
shares to the third party unless it procures that the third
party also acquires the relevant percentage of the shares of
the notifying tag-along offerees at the same price as the
third party is to buy the selling shareholder's Shares.
24. DRAG-ALONG RIGHTS
24.1 If a bona fide third party (THIRD PARTY) offer (OFFER) is made
for all of the Ordinary Shares, ACP Shares and BCP Shares on
issue (ie for the Company as a whole), the party receiving
that offer must communicate the offer and its terms to all
Shareholders.
24.2 Subject to clauses 24.4 and 24.5, if Shareholders holding a
total number of Ordinary Shares, ACP Shares or BCP Shares
representing more than 50% of Diluted Capital wish to accept
the offer by the third party (ACCEPTING SHAREHOLDERS), the
accepting shareholders may notify (DRAG-ALONG NOTICE) the
remaining Shareholders (DISSENTING SHAREHOLDERS) accordingly.
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24.3 Subject to clauses 24.4 and 24.5, on receipt of a drag-along
notice, the dissenting shareholders become conditionally bound
to accept the offer of the third party in respect of their
Ordinary Shares, ACP Shares or BCP Shares (as the case may be)
on the same terms as the accepting shareholders.
24.4 Within 14 days of receipt of a drag-along notice, the
dissenting shareholders may by notice to the accepting
shareholders require the accepting shareholders to sell their
Ordinary Shares, ACP Shares or BCP Shares (as the case may be)
to an alternative buyer that is ready, willing and able to buy
those shares on the same terms as the third party was prepared
to buy them under the offer (ALTERNATIVE BUYER).
24.5 If notice is given under clause 24.4:
24.5.1 the right of the accepting shareholders to accept the
offer by the third party ends;
24.5.2 the obligation of the dissenting shareholders to
accept the offer by the third party is rescinded;
24.5.3 the accepting shareholders are obliged to sell their
ordinary shares, ACP Shares or BCP Shares (as the
case may be) to the alternative buyer on the same
terms as were applicable under the offer;
24.5.4 the dissenting shareholders must procure that the
alternative buyer:
(a) buys the accepting shareholders' ordinary
shares, ACP Shares or BCP Shares (as the case
may be) within 14 days of the giving of
notice under clause 24.4 on the same terms as
were applicable under the offer by the third
party; and
(b) agrees to be bound by this agreement by an
instrument in form and substance acceptable to
the Board.
24.6 If no notice is given under clause 24.4:
24.6.1 the accepting shareholders may accept the offer made
by the third party within 14 days after the expiry of
the period for giving notice under clause 24.4;
24.6.2 the dissenting shareholders are deemed to accept the
offer made by the third party as soon as the
acceptance by all accepting shareholders is made
under clause 24.6.1.
24.7 On a Shareholder becoming bound to transfer ordinary shares,
ACP Shares or BCP Shares (as the case may be) under clause
24.5 or 24.6, the Shareholder must transfer the relevant
shares accordingly, subject to and conditional on payment of
the transfer consideration in accordance with the terms of the
relevant offer.
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25. CONVERSION OF ACP AND BCP SHARES
25.1 The ACP Shareholders and the BCP Shareholders may convert
their ACP Shares or BCP Shares (as the case may be) to
Ordinary Shares at any time, as set out in the Company's
constitution.
25.2 The Company may compulsorily require the ACP Shareholders and
the BCP Shareholders to convert their ACP Shares and BCP
Shares (respectively) to Ordinary Shares if the Company
undertakes an initial public offering of Ordinary Shares which
raises at least $10 million at a minimum price per publicly
offered share that equals or exceeds the aggregate of:
25.2.1 $2.50; plus
25.2.2 such amount that ensures a 25% internal rate of return
on $2.50 for a period equal to the period from the
date of this agreement to the date of the initial
public offering,
adjusted as necessary for capital reconstructions since the
date of this agreement.
25.3 The conversion ratio for the purpose of this clause 25 is 1
ACP Share or 1 BCP Share (as the case may be) for 1 Ordinary
Share, subject to adjustment of that ratio for:
25.3.1 capital reconstructions; and
25.3.2 issue of any Shares at an issue price less than the
issue price of the ACP Shares or BCP Shares (as the
case may be),
in accordance with the adjustment mechanisms or formula set
out in the Company's constitution.
25.4 Despite any other provision of this agreement, the Board may
by Directors Special Majority decide to undertake an initial
public offering of the Company which would allow conversion of
ACP and BCP Shares pursuant to clause 25.2.
26. REDEMPTION OF ACP AND BCP SHARES
26.1 Both the ACP Shareholders and the BCP Shareholders may redeem
their ACP Shares and BCP Shares (respectively):
26.1.1 after the 6th anniversary of the issue date of the ACP
Shares, if the Company has not listed on a securities
exchange in Australia or elsewhere;
26.1.2 on the occurrence of a Liquidity Event; or
26.1.3 on a voluntary merger or amalgamation of the Company.
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26.2 If the ACP Shares or BCP Shares are redeemed, the ACP
Shareholders and BCP Shareholders (as the case may be) will be
entitled to receive the following amount for each ACP Share
and BCP Share they hold (REDEMPTION Amount) in the following
order of priority:
26.2.1 the original issue price paid for the BCP Shares; and
26.2.2 any accrued cumulative dividend not paid on the BCP
Shares under clause 27:
26.2.3 the original issue price paid for the ACP Shares; and
26.2.4 any accrued cumulative dividend not paid on the ACP
Shares under clause 27,
adjusted as necessary for capital reconstructions; and
26.2.5 a pro rata proportion of surplus assets and profits of
the Company (as determined by an independent valuer)
calculated as if the ACP Shares and BCP Shares had
been converted into ordinary shares in accordance with
clause 25 at that time.
26.3 Amounts payable on a redemption of BCP Shares must be paid in
priority to any payments or dividends to ACP Shareholders
(other than amounts pursuant to clause 26.2.5) and Ordinary
Shareholders. As between the BCP Shareholders, the BCP
Shareholders will participate pro rata among themselves.
26.4 Amounts payable on a redemption of ACP Shares must be paid in
priority to any payments or dividends to Ordinary Shareholders
but after payment of all amounts due to the BCP Shareholders
(other than amounts pursuant to clause 26.2.5). As between the
ACP Shareholders, those Shareholders will participate pro rata
among themselves.
26.5 If and to the extent the Company is unable to pay all or part
of the Redemption Amount on the date ACP Shares or BCP Shares
are properly redeemed, then the Redemption Amount will be a
debt due to each affected ACP or BCP Shareholder on terms to
be agreed by each such ACP or BCP Shareholder and the Company
and failing agreement, payable in priority from surplus cash
flows of the Company as and when such surpluses arise and, on
a liquidation of the Company, payable from a provable debt due
by the Company.
27. ACP AND BCP SHARE DIVIDENDS
27.1 Subject to clauses 27.4 and 27.5, the holders of ACP Shares
and BCP shares are entitled to a 10% cumulative preferential
dividend per annum (based upon the issue price of that share
respectively).
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27.2 The dividend is payable in priority to any dividends to
Ordinary Shareholders. The BCP Shareholders rank first and the
ACP Shareholders rank second in the order of priority for the
payment of dividends.
27.3 The dividend will not be payable on any ACP Share or BCP Share
if:
27.3.1 an ACP Shareholder or BCP Shareholder voluntarily
converts such ACP Share or BCP Share to an Ordinary
Share;
27.3.2 the Company compulsorily requires the ACP Shareholder
or BCP Shareholder to convert such ACP Share or BCP
Share to an Ordinary Share under clause 25.2.
27.4 The dividend is only payable (unless the Board decides
otherwise by Directors Special Majority resolution) if:
27.4.1 a Liquidity Event occurs; or
27.4.2 there is a voluntary merger or amalgamation of the
Company.
The dividend will be payable on the date on which any of those
events occurs.
27.5 The ACP Shareholders waive any right to require payment of
accumulated dividends to which they might otherwise be
entitled under the Company's constitution to the extent
inconsistent with clause 27.
28. FREEDOM TO ACT
Except as expressly set out in this agreement, this agreement does not
restrict the freedom of an ACP Shareholder or BCP Shareholder to
conduct any business or activity in any place or in any other field
without accounting to the other Shareholders or to the Company.
29. RELEASE AND INDEMNITY
Praxis US warrants that it makes no claims now in connection with
Licence and Research & Development Agreements entered into between
Pharmaxis and the Australian National University.
30. DISPUTE RESOLUTION
30.1 If a dispute or deadlock between Shareholders cannot be
resolved within 30 days of the dispute arising, the matter is
to be submitted to mediation administered by the Australian
Commercial Disputes Center Limited (ACDC). The conciliation is
to be conducted and held in accordance with the conciliation
rules of ACDC in force at the time. Any conciliation meeting
will be held in the Australian Capital Territory and each
party is to bear its own costs in relation to the holding of
the hearing.
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30.2 If dispute or deadlock has not been resolved under clause 30.1
within 30 days of the matter being first heard for mediation
by ACDC, the Shareholders are free to exercise their legal
rights (if any).
31. CONFIDENTIAL INFORMATION AND PUBLICITY
31.1 A Shareholder must:
31.1.1 keep confidential all information about:
(a) this agreement and its subject matter; and
(b) the Company's Business and affairs,
except to the extent it comes into the public domain
(other than by way of breach of a duty or obligation
of confidentiality by any person);
31.1.2 not disclose that information or make any public
statements about this agreement or its subject
matter to third parties unless:
(a) the third party is an officer, employee, agent
or contractor of, or adviser to, the
Shareholder 'with a need to know' and who is
bound to, or agrees to, likewise keep the
information confidential;
(b) the third party is a related body corporate of
the Shareholder or a shareholder or beneficiary
of the Shareholder where that related body
corporate or shareholder or beneficiary
likewise agrees to keep the information
confidential;
(c) the Board consents in writing;
(d) required for the purposes of or in connection
with any actual pending or threatened legal
proceedings or any advice in connection with
any possible legal proceedings involving the
Shareholder or any of its officers, employees
or agents;
(e) required by the mandatory provisions of:
(i) the listing rules of any securities
exchange;
(ii) statute or law; or
(iii) a regulatory body having authority
over it,
and to the extent there is no applicable
`commercial in confidence' (or equivalent
exception) applicable; or
(f) permitted by clause 11.6.
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31.2 A Shareholder's obligations under this clause 31 survive the
Shareholder ceasing to be a Shareholder of the Company.
32. ACCESS
Subject to clause 31, each Director and each Shareholder through its
officers, employees and agents:
32.1 may have free access to the property, employees, agents,
consultants and facilities of the Company; and
32.2 may at their own expense inspect, copy and audit the books
and records of the Company at any time during usual business
hours.
33. NATURE OF RELATIONS
33.1 The Shareholders are not in a fiduciary relationship in
relation to the other.
33.2 A Shareholder:
33.2.1 is not liable for the acts or defaults of any other
Shareholder; and
33.2.2 may act on its own behalf but not on behalf of any
other Shareholder.
34. AGREEMENT PREVAILS
This agreement supersedes and prevails over any term sheets, heads of
agreement or similar documents relating to investment by the ACP
Shareholders and the BCP Shareholders in the Company. The Shareholders
agree that the Company's constitution will be updated and amended so as
to conform with this agreement as soon as practicable after the date of
this agreement.
35. ASSIGNMENT
A Shareholder must not:
35.1 assign the benefit of this agreement;
35.2 mortgage, charge or otherwise encumber to the benefit of this
agreement; or
35.3 cause its obligations under this agreement to be assumed by a
third party,
without the prior written consent of the other Shareholders.
36. NOTICE
36.1 Any communication (including notice) under this agreement must
be in writing.
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36.2 A communication may be given to a party by sending it to the
party's address as notified on the first page of this
agreement (or such other address as notified from time to
time) or by sending it by facsimile to the party's facsimile
number.
36.3 A communication is deemed to be received by a party, if given
by facsimile, at the time and on the day shown in the sender's
transmission report, if it shows that the whole communication
was sent to the party's facsimile number.
36.4 A communication given by post is to be taken to be received if
posted within Australia to an Australian address on the
business day after posting and in any other case, on the third
business day after posting.
37. COSTS
37.1 The reasonable costs and expenses incurred by the BCP
Shareholder in connection with their due diligence
investigations on the Company, the negotiations leading up to,
and negotiation, preparation and execution of the Transaction
Documents and any instrument or other document executed to
give effect to any provisions of the Transaction Documents
(including reasonable legal, patent and other consultants
costs) will be borne by the Company up to a maximum of $10,000
for each BCP Shareholder that subscribes for more than $1
million worth of BCP Shares. The combined BCP Shareholders
legal costs are not to exceed $25,000.
37.2 Subject to clause 37.1, each party to this agreement will pay
its own costs and expenses incurred in connection with the
preparation and execution of the Transaction Documents and any
instrument or other document executed to give effect to any
provisions of the Transaction Documents.
37.3 The Company must pay all stamp or other duty on this Agreement
and on any instrument or other document executed to give
effect to any provisions of this Agreement.
38. GOVERNING LAW
38.1 This agreement is governed by the laws of the Australian
Capital Territory.
38.2 The Shareholders irrevocably submit to the non-exclusive
jurisdiction of the courts of the Australian Capital Territory
and the courts of appeal from them.
38.3 A Shareholder may not object to the jurisdiction of any of
those courts on the ground that it is an inconvenient forum or
that it does not have jurisdiction.
39. COUNTERPARTS
This agreement may be executed in any number of counterparts. A
counterpart may be a facsimile. Together all counterparts make up one
instrument.
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40. LICENSED FUNDS
40.1 Each of the Shareholders, other than Xxxxxxxxxx and the
Trustee:
40.1.1 represents and warrants to the other Parties that it
enters this Agreement not in the capacity as a manager
or trustee of a Licensed Fund; and
40.1.2 if it is or becomes a manager or trustee of a Licensed
Fund must notify the other parties immediately upon it
becoming a party or becoming a manager or trustee of
the Licensed Fund (whichever is the latter).
40.2 The Company must:
40.2.1 proactively inform the manager of each Licensed Fund
and respond to any requests from a manager of a
Licensed Fund in a timely and expeditious manner, of
any information concerning the status of the Company
as an Eligible Investee Company or a change in the
status of an associate or related body corporate of
the Company, and any information that a manager of a
Licensed Fund may reasonably require to comply with
its obligations under the relevant IIF Management
Licence;
40.2.2 provide to the manager of each Licensed Fund on the
date of this agreement and subsequently within 14 days
of receiving a request from a manager of a Licensed
Fund so to provide (on at least an annual basis) the
following information:
(a) the names of all officers and senior executives
of the Company and its related bodies corporate;
(b) the names of all the Company's related bodies
corporate;
(c) confirmation that no moneys invested by, or on
behalf of, a Licensed Fund will be used to
discharge a debt to, or acquire an asset from,
the manager or trustee of a Licensed Fund or any
of their officers or related bodies corporate;
(d) confirmation that the Company will not be
acquiring any goods or services from the
manager or trustee of the Licensed Fund or
any of their officers or related bodies
corporate;
(e) confirmation that the Company does not owe any
money on any account whatever to the manager
or trustee of a Licensed Fund or any of their
officers or related bodies corporate; and
(f) confirmation that in respect of any other holder
of a IIF Management Licence or another Licensed
Fund (in this clause called an OTHER RELEVANT
PARTY), the Company:
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29
(i) cannot Control, or influence materially,
the Other Relevant Party's activities or
internal affairs;
(ii) is not a member or beneficiary of or
partner in the Other Relevant Party;
(iii) is not in a position to cast, or to
Control the casting of, a vote at a
meeting of the equity holders in the
Other Relevant Party or to Control
or influence materially the Other
Relevant Party's internal affairs;
(iv) has no power to dispose of, or to
exercise Control over the disposal of,
a security in or issued by the Other
Relevant Party;
(v) is not owed a debt by and is not a
creditor of the Other Relevant Party; or
(vi) does not act as agent for the Other
Relevant Party in any transaction or
dealing;
40.2.3 represent and warrant that the information provided
by the Company pursuant to clause 40.2.2 is true and
correct; and
40.2.4 ensure that it does all matters and things as are
confirmed in the information provided by the Company
pursuant to clause 40.2.2.
40.2.5 A reference in this Clause 40.2 to "Control" of a
corporation is a reference to the possession directly
or indirectly of the power whether or not having
statutory, legal or equitable force, and whether or
not based on statutory, legal or equitable rights,
directly or indirectly to:
(a) control more than 50% of the membership of the
board of directors of that corporation; or
(b) control more than 50% of its voting shares; or
(c) direct or cause the direction of the
management and policies of the manager,
whether by means of trusts, agreements, arrangements,
understandings, practices, the ownership of any
interest in shares or stock of that company or
otherwise.
40.2.6 A reference in this Clause 40.2 to "Control" of a
corporation or other person who is or proposes to act
as a trustee is a reference to the possession directly
or indirectly of the power to:
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30
(a) control the trustee;
(b) control any decisions of the trustee as trustee
of the relevant trust;
(c) appoint, remove or replace the trustee;
(d) appoint, remove or replace a majority of the
directors of the trustee; or
(e) direct the allocation of any benefits under the
relevant trust.
40.2.7 A reference in this Clause 40.2 to "Control" of an
event, outcome or result or the exercise of a right,
power, authority, discretion or remedy means the
possession, directly or indirectly, of the power to
bring about or direct that event outcome or result or
direct the exercise of that right, power, authority,
discretion or remedy.
41. LIMITATIONS OF LIABILITY
41.1 All parties acknowledge and agree that:
41.1.1 Xxxxxxxxxx has entered into this agreement in its
capacity as manager of the Australian Bioscience Trust
and trustee of the Rothschild Bioscience Ventures II
fund, as the case may be, and in no other capacity;
41.1.2 Rothschild is not liable to satisfy or pay any of its
obligations under this agreement, and will have no
liability to any other party, except to the extent of
Xxxxxxxxxx'x right of indemnity out of the assets of
the Australian Bioscience Trust or the Rothschild
Bioscience Ventures II fund as the case may be; and
41.1.3 if those assets are insufficient, no party will seek
to recover any shortfall by bringing proceedings
against Xxxxxxxxxx personally or applying to have
Xxxxxxxxxx wound up.
41.2 Unless otherwise agreed, the other parties release Xxxxxxxxxx
from any personal liability whatsoever in respect of any loss
or damage which cannot be paid or satisfied out of the assets
of the Australian Bioscience Trust or the Rothschild
Bioscience Ventures II fund, as the case may be.
41.3 Clauses 41.1 and 41.2 above do not apply to any obligation or
liability of Xxxxxxxxxx to the extent that it is not satisfied
because there is a reduction in the extent of Xxxxxxxxxx'x
indemnification out of the assets of the Australian Bioscience
Trust or the Rothschild Bioscience Ventures II fund, as the
case may be, as a result of Xxxxxxxxxx'x own fraud, negligence
or wilful breach of trust.
41.4 Perpetual Trustees Nominees Limited enters into this agreement
only in its capacity as trustee of the Australian Bioscience
Trust and in no other capacity. A
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31
liability arising under or in connection with this agreement
is limited to and can be enforced against Perpetual Trustees
Nominees Limited only to the extent to which it can be
satisfied out of property of the Australian Bioscience Trust
out of which Perpetual Trustees Nominees Limited is actually
indemnified for the liabilty. This limitation of Perpetual
Trustees Nominees Limited's liability applies despite any
other provision of this agreement and extends to all
liabilities and obligations of Perpetual Trustees Nominees
Limited in any way connected with any representation,
warranty, conduct, omission, agreement or transaction related
to this agreement.
41.5 The other parties may not sue Perpetual Trustees Nominees
Limited in any capacity other than as trustee of the
Australian Bioscience Trust, including seek the appointment of
a receiver (except in relation to property of the Australian
Bioscience Trust), a liquidator, an administrator or any
similar person to Perpetual Trustees Nominees Limited or prove
in any liquidation, administration or arrangement of or
affecting Perpetual Trustees Nominees Limited (except in
relation to property of the Australian Bioscience Trust).
41.6 The provisions of clauses 41.4 and 41.5 shall not apply to any
obligation or liability of Perpetual Trustees Nominees Limited
to the extent that it is not satisfied because under the trust
deed establishing the Australian Bioscience Trust or by
operation of law there is a reduction in the extent of
Perpetual Trustees Nominees Limited's indemnification out of
the assets of the Australian Bioscience Trust, as a result of
Perpetual Trustees Nominees Limited's fraud, negligence or
breach of trust.
41.7 It is acknowledged that the manager of the Australian
Bioscience Trust is responsible under the trust deed
establishing the Australian Bioscience Trust for performing a
variety of obligations relating to the Australian Bioscience
Trust, including under this agreement. No act or omission of
Perpetual Trustees Nominees Limited (including any related
failure to satisfy its obligations or breach of representation
or warranty under this agreement) will be considered fraud,
negligence or breach of trust of Perpetual Trustees Nominees
Limited for the purposes of clause 41.6 to the extent to which
the act or omission was caused or contributed to by any
failure by the manager or any other person (other than
Perpetual Trustees Nominees Limited, or a person whose acts or
omissions Perptetual Trustees Nominees is liable for under the
deed establishing the Australian Bioscience Trust) to fulfil
its obligations relating to the Australian Bioscience Trust or
by any other act or omission of the manager or any other
person (other than Perpetual Trustees Nominees Limited, or a
person whose acts or omissions Perptetual Trustees Nominees is
liable for under the deed establishing the Australian
Bioscience Trust).
41.8 Perpetual Trustee Nominees Limited is not obliged to do or
refrain from doing anything under this agreement (including
incur any liability) unless Perpetual Trustees Nominees
Limited's liability is limited in the same manner as set out
in clauses 41.4 to 41.6.
41.9 Mooroolbark enters into this agreement only in its capacity as
trustee of the Pharmaxis Investment Trust and in no other
capacity. A liability arising under or in connection with this
agreement is limited to and can be enforced against
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32
Mooroolbark only to the extent to which it can be satisfied
out of the property of the Pharmaxis Investment Trust. This
limitation of Mooroolbark's liability applies despite any
other provision of this agreement and extends to all
liabilities and obligations of Mooroolbark in any way
connected with any representation, warranty, conduct,
omission, agreement or transaction related to this agreement.
41.10 The other parties to this agreement may not sue Mooroolbark in
any capacity other than as trustee of the Pharmaxis Investment
Trust, including seeking the appointment of a receiver (except
in relation to property of the Pharmaxis Investment Trust), a
liquidator, an administrator or any similar persons to
Mooroolbark or prove any liquidation, administration or
arrangement of or affecting Mooroolbark (except in relation to
property of the Pharmaxis Investment Trust).
41.11 The provisions of clauses 41.9 and 41.10 shall not apply to
any obligation or liability of Mooroolbark to the extent that
it is not satisfied because under the Trust Deed establishing
the Pharmaxis Investment Trust or by operation of law there is
a reduction in the extent of Mooroolbark's indemnification out
of those assets of the Pharmaxis Investment Trust, as result
of Mooroolbark's fraud, negligence or breach of trust.
41.12 CM Capital enters into this agreement only in its capacity as
trustee of the CM Venture Trust No.3 and in no other capacity.
A liability arising under or in connection with this agreement
is limited to and can be enforced against CM Capital only to
the extent to which it can be satisfied out of the property of
the CM Venture Trust No.3. This limitation of CM Capital's
liability applies despite any other provision of this
agreement and extends to all liabilities and obligations of CM
Capital in any way connected with any representation,
warranty, conduct, omission, agreement or transaction related
to this agreement.
41.13 The other parties may not sue CM Capital in any capacity other
than as trustee of the CM Venture Trust No.3, including
seeking the appointment of a receiver (except in relation to
property of the CM Venture Trust No.3), a liquidator, an
administrator or any similar persons to CM Capital or prove
any liquidation, administration or arrangement of or affecting
CM Capital (except in relation to property of the CM Venture
Trust No.3).
41.14 The provisions of clauses 41.12 and 41.13 shall not apply to
any obligation or liability of CM Capital to the extent that
it is not satisfied because under the Trust Deed establishing
the CM Venture Trust No.3 or by operation of law there is a
reduction in the extent of CM Capital's indemnification out of
those assets of the CM Venture Trust No.3, as result of CM
Capital's fraud, negligence or breach of trust.
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33
41.15 AVCF enters into this agreement only in its capacity as
general partner of Australia Venture Capital Fund LP and in no
other capacity. A liability arising under or in connection
with this agreement is limited to and can be enforced against
AVCF only to the extent to which it can be satisfied out of
the property of Australia Venture Capital Fund LP. This
limitation of AVCF's liability applies despite any other
provision of this agreement and extends to all liabilities and
obligations of AVCF in any way connected with any
representation, warranty, conduct, omission, agreement or
transaction related to this agreement.
41.16 The other parties may not sue AVCF in any capacity other than
as general partner of Australia Venture Capital Fund LP,
including seeking the appointment of a receiver (except in
relation to property of the Australia Venture Capital Fund
LP), a liquidator, an administrator or any similar persons to
AVCF or prove any liquidation, administration or arrangement
of or affecting AVCF (except in relation to property of
Australia Venture Capital Fund LP).
41.17 The provisions of clauses 41.15 and 41.16 shall not apply to
any obligation or liability of AVCF to the extent that it is
not satisfied because under the Partnership Deed establishing
Australia Venture Capital Fund LP or by operation of law there
is a reduction in the extent of AVCF's indemnification out of
those assets of Australia Venture Capital Fund LP, as result
of AVCF's fraud, negligence or breach of trust.
DATED AUGUST 23RD 2002
Signed for and on behalf of
PRAXIS PHARMACEUTICALS INC by:
/s/ XXXXXXX X. XXXXXX /s/ XXXXX XXXXXXXX
----------------------------------- --------------------------------------
Director Director/Secretary
XXXXXXX X. XXXXXX XXXXX XXXXXXXX
----------------------------------- --------------------------------------
Name (please print) Name (please print)
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34
Signed for and on behalf of PERPETUAL TRUSTEES
NOMINEES LIMITED by its attorneys who declare
that they have no notice of revocation of the
Power of Attorney under which this document
is signed:
/s/ XXXXX XXXXX XXXXXXX /s/ XXXXXXXX XXXXXXX
----------------------------------- --------------------------------------
XXXXX XXXXX XXXXXXX -SENIOR MANAGER XXXXXXXX XXXXXXX - ASSISTANT MANAGER
----------------------------------- --------------------------------------
Name (please print) Name (please print)
Signed for and on behalf of
ROTHSCHILD BIOSCIENCE MANAGERS
LIMITED by:
/s/ X. XXXXXX /s/ S.D. XXXXX
----------------------------------- --------------------------------------
Director Director / Company Secretary
X. XXXXXX S.D. XXXXX
----------------------------------- --------------------------------------
Name (please print) Name (please print)
Signed by the authorised representative of
CM CAPITAL INVESTMENTS PTY LTD as
trustee for CM Capital Venture Trust No. 3:
/s/ XXXXXX XXXXXXXX
----------------------------------
Authorised Representative
XXXXXX (XXXXXX) XXXXXXXX
----------------------------------
Name (please print)
EXECUTED by an authorised representative
of CIBC AUSTRALIA VC FUND LLC. on behalf
of the Australia Venture Capital Fund L.P.
in the presence of
/s/ XXXXXXX X. XXXXXXXXXXX
------------------------------------
Signature of Authorised Representative
XXXXXXX X. XXXXXXXXXX
MANAGING DIRECTOR
------------------------------------
Name of Authorised Representative
(print)
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35
Signed for and on behalf of
MOOROOLBARK TECHNOLOGY PTY LTD by:
/s/ X X XXXXXXX /s/ XXXXX XXXXX
------------------------------------ ------------------------------------
Director Company Secretary
X X XXXXXXX XXXXX XXXXX
------------------------------------ ------------------------------------
Name (please print) Name (please print)
EXECUTED by THE AUSTRALIAN NATIONAL UNIVERSITY by.its Attorney under Power
pursuant to Power of Attorney Registered No.103308 who states that he is the Pro
Vice-Chancellor (Administration)/Director, Finance & Business Services of the
Australian National University and that he has no notice of revocation of the
Power in the presence of:
/s/ XXXX XXXXXXX XXXXXXX /s/ XXXXXX XXXXX
----------------------------------- -----------------------------------
Witness
XXXX XXXXXXX XXXXXXX XXXXXX XXXXX
----------------------------------- -----------------------------------
Name (please print) Name (please print)
Signed for and on behalf of
PHARMAXIS PTY LTD by:
/s/ XXXX X. XXXXXXXXX XXXXX XXXXXX
----------------------------------- ----------------------------------
Director Director / Company Secretary
Xxxx Xxxxxxxxx Xxxxx Xxxxxx
Signed by XX XXXXXXX XXXXXX:
/s/ XXXXX XXXXXXX /s/ XXXXXXX X. XXXXXX
----------------------------------- ---------------------------------
Witness Xx Xxxxxxx Xxxxxx
XXXXX XXXXXXX XXXXXXX X. XXXXXX
----------------------------------- ---------------------------------
Name (please print) Name (please print)
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36
Signed by XX XXXXX XXXXXXXX:
/s/ XXXXXXX XXXXXXX /s/ XXXXX XXXXXXXX
----------------------------------- --------------------------------
Witness Xx Xxxxx Xxxxxxxx
XXXXXXX XXXXXXX XXXXX XXXXXXXX
----------------------------------- --------------------------------
Name (please print) Name (please print)
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37
